Everything You Need to Know About Comparative Marketing Analysis
A comparative market analysis (CMA) is one of the most dependable and authoritative tools a real estate professional has to gauge the value of a property. When used in combination with other vital data—like the square footage of a home, it’s age, and the neighborhood it is located in—a CMA can predict the most likely sale price for your home with impressive precision.
But in order to produce well-defined results, a home analysis has to be completed using the right information, by someone who has a thorough understanding of your local market. This is why many individuals selling their home are surprised when they don’t receive an offer, even after they’ve looked at other homes in their area on MLS websites— if you don’t know how to use that information to paint an accurate picture of the overall market, you’ll likely end up with a report that doesn’t reflect the reality you will be facing.
Let’s take a closer look at how, with market analysis, home listings can be set up for success.
What is a Comparative Market Analysis (CMA)?
A comparative market analysis, also known as a home market analysis, is a method of determining a property’s value. It is completed by cross referencing the price at which similar homes, within the same neighborhood (or nearby areas), have sold. A real estate agent then uses this relative data to deduce the most likely sale price for the property being listed.
Why Get a CMA?
There are a few different reasons why a comparative market analysis is recommended when selling or buying a home.
To start, when backed by a CMA, homes are less likely receive lowball offers. This is because the seller’s agent can justify the listing price using factual, evidence-based information.
Another benefit is that sellers who conduct market research ahead of time can better structure their offers to secure their dream property. For example, if most properties in a particular neighborhood have sat on the market for three months before selling, and a buying client is willing to close the deal in 30 days, their offer will be more appealing.
Lastly, for sellers, a CMA can help you determine whether or not your home has any special features or amenities that are rare and appealing. For instance, if your home is located across the street from a top-rated school, or if it features a swimming pool when the majority of homes in your area don’t, you may be able to list at a higher price.
What Information Does a CMA Use?
Real estate agents have access to industry reports and other data that the average person doesn’t, including exclusive MLS data, access to private non-MLS sales, and their own book of business.
They also know how to factor in listings that others often overlook, like those that were cancelled before a sale was made, or new builds that are expected to go on the market within a short period of time.
Lastly, local real estate agents are familiar with the community and often have years of experience managing listings and sales in their area. At Main Line Homes, for example, we’ve been marketing, negotiating, and finalizing home sales in the Pennsylvania Main Line areas for more than 20 years, so we know these neighbourhoods better than anyone.
What Factors Are Used to Compare Homes?
There are several factors that are referenced when conducting a market analysis for home evaluation. A few of the most important factors include:
Most people assume that location means neighborhood, but this isn’t necessarily the case. Real estate agents will also consider how close your property is to undesirable landmarks, like noisy railroads or areas with high crime rates. There are a wide range of characteristics that can impact how favorable the location of your home is.
When purchasing a home, buyers aren’t just interested in the property itself. They’re also interested in the lifestyle they’ll enjoy after they move in. Amenities play a huge role when determining the quality of life a property will provide. Conveniences like public swimming pools, natural parks, walking trails, access to public transportation, and off-leash dog areas are all features that attract homebuyers.
When compiling a CMA, houses with exceptional curb appeal always have a competitive edge. This also applies to the community as a whole— if an area appears rundown or poorly kept, it’s less likely buyers will be interested. If the exterior of home provides a pleasant first impression, it will signify to potential buyers that you put effort into maintaining your home and that the property will likely be in great condition.
If you’re interested in a CMA, real estate agencies with a longstanding history of serving your area are your best bet. If you’re interested in Main Line real estate or purchasing a home in one of our beautiful, family-friendly communities, contact one of our friendly and knowledgeable real estate agents today.
Janis Peterson, REALTOR®, GRI, ABR, SRES, CSP
Main Line Homes Luxury Real Estate Agent